RBC, CIBC and Toronto-Dominion Raise Dividends

Aug. 30 (Bloomberg) -- Royal Bank of Canada, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce raised
their dividends after reporting third-quarter profits that beat
analysts’ estimates on consumer lending.

Royal Bank, the country’s biggest lender, said profit for
the period ended July 31 rose 73 percent to a record C$2.24
billion ($2.26 billion). Toronto-Dominion, the second-biggest
bank, said net income climbed 14 percent to C$1.7 billion, or
C$1.78 a share, while CIBC said profit rose 42 percent to C$841
million, or C$2 a share.

The three Toronto-based lenders join Bank of Montreal and
Bank of Nova Scotia in raising dividends this week as gains in
consumer lending and higher trading revenue helped the world’s
soundest banks report earnings that topped estimates.

The banks raised their payouts while forecasting that loan
and revenue growth may slow in the next few quarters as the
housing market cools and tapped-out consumers with record debt
levels borrow less.

“Investors definitely feel there’s more of a value being
placed on dividend yield in this low interest-rate
environment,” Colleen Johnston, chief financial officer of
Toronto-Dominion, said today in a phone interview. “We’re
seeing good loan growth and deposit growth -- it’s slowing down
a little bit, which is very much expected given the
environment.”

Topped Estimates

Royal Bank said it earned C$1.31 a share excluding items,
beating the C$1.18-a-share average estimate of 15 analysts
surveyed by Bloomberg News. Toronto-Dominion reported adjusted
profit of C$1.91 a share, topping the C$1.83-a-share estimate,
while CIBC, the fifth-biggest bank, reported adjusted earnings
of C$2.06 a share, above the C$1.96-a-share average estimate.

“Royal reported one of the strongest quarters of its peers
reported to date, leveraging the strength of its domestic retail
platform,” John Aiken, an analyst with Barclays Plc, said today
in a note. “However, similar with CIBC, expectations remain
that domestic retail revenues should face headwinds.”

Canadian banking profit at Royal Bank rose to a record
C$1.13 billion, up 27 percent from a year ago, on growth of
deposits, mortgages and loans.

Slowdown Expected

Government figures showing Canada’s current account deficit
expanded to the widest in almost two years as exports fell, adds
to evidence the economy may have lost momentum in the second
quarter. Statistics Canada reports second-quarter gross domestic
product tomorrow and economists forecast annualized growth of
1.6 percent after 1.9 percent in the first quarter.

“You’d have to expect some slowdown” in housing, said
David McKay, head of Canadian consumer lending at Royal Bank, on
a conference call. “We’ve come through a very strong spring
mortgage season.”

Profit at the RBC Capital Markets investment-banking
business rose 88 percent to C$486 million from C$259 million a
year earlier, as trading revenue more than doubled.

Toronto-Dominion said Canadian banking profit climbed 8.7
percent to a record C$864 million, bolstered by loan and deposit
growth from last year’s acquisition of the MBNA Canada credit-card portfolio from Bank of America.

Profit from the bank’s TD Securities investment-banking
business rose 61 percent to C$180 million, fueled by higher
trading revenue. Trading-related income more than tripled to
C$360 million from a year ago, driven by interest-rate and
credit, the bank said.

Energy Acquisition

CIBC’s earnings were aided by higher profit from consumer
lending and business banking, which rose 7.8 percent to C$594
million from the year-earlier period. The bank also posted
profit gains in wealth management and its investment-banking
unit, as trading revenue more than doubled to C$122 million from
a year ago.

CIBC also said it agreed to buy Griffis & Small LLC, a
Houston-based energy advisory firm specializing in takeovers in
the exploration and production sector. The price of the deal,
which is expected to close in the fourth quarter, wasn’t
disclosed.

Royal Bank unexpectedly raised its dividend 5.3 percent to
60 cents a share, its first increase since March. Toronto-Dominion raised its payout 5.4 percent to 77 cents a share, and
raised its payout range to between 40 percent and 50 percent of
earnings, up from 35 percent to 45 percent. CIBC increased its
payout for the first time in a year, to 94 cents.

Royal Bank said separately that it appointed David Denison,
former CEO of Canada Pension Plan Investment Board, as a
director.

Canadian Western Bank, the country’s eighth-largest lender,
reported late yesterday that it had had record net income of
C$48 million, or 61 cents a share. Montreal-based National Bank
of Canada, the No. 6 lender, also reports today.